Form 8-K People's Utah Bancorp For: Sep 30

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 24, 2018

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company [X]  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [X]

 

 

 

 

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Item 2.02Results of Operations and Financial Condition.

On October 24, 2018, the Company issued a press release announcing its financial results for the quarter ended September 30, 2018 and the quarterly dividend. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information in this Item 2.02 and the Exhibit attached hereto is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such document or filing.

 

Item 9.01Financial Statements and Exhibits.

 

 

(d) Exhibits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.1

 

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PEOPLE’S UTAH BANCORP REPORTS THIRD QUARTER RESULTS AND ANNOUNCES QUARTERLY DIVIDEND PAYMENT

Third Quarter Highlights

AMERICAN FORK, UTAH, October 24, 2018 – People’s Utah Bancorp (the “Company” or “PUB”) (Nasdaq: PUB) reported net income of $10.5 million for the third quarter of 2018 compared with $10.5 million for the second quarter of 2018, and $6.2 million for the third quarter of 2017.  Diluted earnings per common share were $0.55 for the third quarter of 2018 compared with $0.55 for the second quarter of 2018, and $0.34 for the third quarter of 2017.  For the nine months ended September 30, 2018 net income was $30.0 million, or $1.58 per diluted common share, compared with $19.3 million, or $1.05 per diluted common share, for the same period a year earlier.    

The Company has excluded non-recurring income including gains or losses on sale of investment securities; costs related to the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank incurred in both 2017 and 2018; and higher income tax expense related to the revaluation of its deferred income tax assets recorded in 2017 to derive non-GAAP financial information related to the Company’s core operations.  The Company believes this non-GAAP^(NG) financial information is useful in understanding the Company’s core financial performance.

Net income from core operations was $10.4 million, or $0.55 per diluted common share, for the third quarter of 2018 compared with $10.2 million, or $0.54 per diluted common share, for the second quarter of 2018 and $6.9 million, or $0.38 per diluted common share, for the third quarter of 2017^(NG).  For the nine months ended September 30, 2018 net income from core operations was $29.9 million, or $1.57 per diluted common share, compared with $20.0 million, or $1.09 per diluted common share, for the same period a year earlier^(NG).

 

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^(NG) Details on Non-GAAP financial information are on last three tables of this press release.

 

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Return on average assets was 1.91% for the third quarter of 2018 compared with 1.93% for second quarter of 2018, and 1.42% for the third quarter of 2017.  Return on average assets from core operations for the third quarter 2018 was 1.89% compared with 1.88% for the second quarter of 2018, and 1.57% for the third quarter of 2017^(NG).  

Return on average equity was 14.97% for the third quarter of 2018 compared with 15.60% for the second quarter of 2018, and 10.14% for the third quarter of 2017.  Return on average equity from core operations was 14.84% for the third quarter of 2018 compared with 15.22% for the second quarter of 2018, and 11.24% for the third quarter of 2017^(NG).  

The Board of Directors declared a quarterly dividend payment of $0.11 per common share. The dividend will be payable on November 13, 2018 to shareholders of record on November 6, 2018. The dividend payout ratio for earnings for the quarter ended September 30, 2018 was 19.6%.  This continues the over 50-year trend of paying dividends by the Company.

“People’s Utah Bancorp achieved strong financial performance in the third quarter.  We experienced widening net interest margins and solid loan and deposit growth from a year ago both organically and through our acquisition transactions,” said Len Williams, President and Chief Executive Officer.  “We are pleased that we achieved $90 million in core deposit growth in the third quarter and maintained our net interest margins from the second quarter of 2018, despite experiencing greater deposit pricing pressures and strong competitive demand for deposits from both banks and credit unions.  We anticipate continued competition for deposits and deposit pricing pressures, consistent with our peers, in the near term.  Our focus continues to be on growing our business organically and diversifying our loan portfolio.  The economic outlook for the Utah market continues to be strong, which we believe provides us further opportunities to grow our organization.  We continue to actively evaluate potential acquisition opportunities throughout the Intermountain West.”

Net Interest Income and Margin

Net interest income grew 36.5%, or $7.3 million, to $27.2 million for the third quarter of 2018 compared with $19.9 million for the third quarter of 2017.  The increase is primarily the result of average interest-earning assets growing 24.0%, or $397 million, and yields on interest-earning assets increasing 67 basis points for the same comparable periods to 5.62% for the third quarter of 2018. Higher yields on interest-earning assets were primarily the result of yields on loans increasing 19 basis points to 6.33% for the same comparable periods and the percentage of loans to total interest-earning assets increasing to 83.7% for the third quarter of 2018 compared with 73.5% for the third quarter of 2017.  

 

 

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Total cost of interest-bearing liabilities increased 33 basis points to 0.63% for the third quarter of 2018 and is the result of the cost of interest-bearing deposits increasing 26 basis points to 0.56% for the third quarter of 2018 compared with the same period a year earlier, and an increase in average short-term borrowing of $45.8 million at a borrowing rate of 2.25% for the third quarter of 2018.  The Company expects the increase in cost of interest-bearing deposits to continue to accelerate over the next several quarters as financial institutions increase their competitive deposit pricing.

Acquisition accounting adjustments, including the accretion of loan discounts and amortization of certificates of deposit premium, added 5 basis points to the net interest margin in the third quarter of 2018.

Provision for Loan Losses

Provision for loan losses was $1.9 million for the third quarter of 2018 compared with $0.9 million for the third quarter of 2017. The increase in provision for loan losses is due primarily to the increase in allowance for loan losses to loans held for investment, excluding specific reserves, offset by a $1.3 million decrease in specific reserves on classified loans.  The Company incurred net charge-offs of $0.9 million in the third quarter of 2018 compared with net charge-offs of $0.6 million in the third quarter of 2017.  

Noninterest Income

Noninterest income was $3.8 million for the third quarter of 2018 compared with $3.0 million the same period a year ago.   The increase was primarily due to a loss on sale of securities a year ago; an increase in card processing fees and service charges on deposit accounts compared with a year earlier; offset by lower mortgage banking income year-over-year.

Noninterest Expense

Noninterest expense was $15.3 million for the third quarter of 2018 compared with $13.1 million for the third quarter of 2017.  Noninterest expense for the third quarter of 2018 increased as a result of $1.1 million of higher salaries and employee benefits primarily from the addition of employees retained from the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank, $0.3 million of higher occupancy, equipment and depreciation costs associated with the net increase of five branches from these transactions, and $0.2 million in higher data processing costs associated with an increase in total accounts from both organic growth and acquisition transactions.

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The Company’s efficiency ratio was 49.33% for the third quarter of 2018 compared with 57.14% for the third quarter of 2017.  The Company’s efficiency ratio from core operations was 49.71% for the third quarter of 2018 compared with 53.89% for the third quarter of 2017^(NG).

Income Tax Provision

Income tax expense was $3.3 million for the third quarter of 2018 compared with $2.7 million for the third quarter of 2017.  The effective tax rate for the third quarter of 2018 was 23.9% compared with 30.2% for the same period a year earlier.  The lower effective tax rate in 2018 compared with 2017 is the result of the reduction in the federal corporate tax rate to a flat rate of 21%, the reduction of the Utah state corporate tax rate to 4.95% as well as tax benefits related to tax-deductible stock compensation expense.

Loans and Credit Quality

Loans held for investment increased $503 million, or 41.4%, to $1.72 billion at September 30, 2018 compared with $1.22 billion at September 30, 2017.  Average loans grew $501 million, or 41.2%, to $1.72 billion for the quarter ended September 30, 2018 compared with $1.22 billion for the quarter ended September 30, 2017.  The increase in loans held for investment was both the result of organic growth as well as loans purchased with the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank.

Non-performing loans increased to $5.8 million at September 30, 2018 compared with $4.1 million at September 30, 2017.  Non-performing loans to total loans were 0.34% at September 30, 2018 compared with 0.34% at September 30, 2017.  Non-performing assets increased to $8.8 million at September 30, 2018 compared with $4.5 million at September 30, 2017.  Non-performing assets to total assets were 0.40% at September 30, 2018 compared with 0.25% at September 30, 2017.  The allowance for loan losses to loans held for investment was 1.36% at September 30, 2018 compared with 1.45% at September 30, 2017.  In accordance with acquisition accounting, loans acquired from the Utah branches of Banner Bank and Town & Country Bank were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, a portion of which reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value, and as a result, no allowance for loan and lease losses is recorded for acquired loans at the acquisition date.  The allowance for loan losses to loans held for investment, excluding purchased loans was 1.66% at September 30, 2018.  The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios.  Remaining discounts on acquired loans was $9.5 million at September 30, 2018.

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Deposits and Liabilities

Total deposits increased $344 million, or 22.5%, to $1.87 billion at September 30, 2018 compared with $1.53 billion at September 30, 2017.  The increase in total deposits was the result of both organic growth as well as the assumption of deposits from the Utah branches of Banner Bank and Town & Country Bank. Non-interest-bearing deposits were 36.2% of total deposits as of September 30, 2018 compared with 34.5% as of September 30, 2017.  

Shareholders’ Equity

Shareholders’ equity increased by $34.2 million to $280 million at September 30, 2018 compared with $245 million at September 30, 2017. The increase resulted primarily from the exchange of Town & Country shares for 466,546 PUB common shares; and from net income earned during the intervening periods, net of cash dividends paid to shareholders.

Conference Call and Webcast

Management will conduct a live conference call and webcast for investors, analysts and the public relating to the Company's results for the third quarter of 2018 at 12:00 p.m. Eastern time on Thursday, October 25, 2018. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 888-317-6003 (international calls 412-317-6061) and the participant entry number is 0621347. Please dial in 10-15 minutes early so the name and company information can be collected prior to the start of the conference.  To participate in the webcast, log on to:

http://services.choruscall.com/links/pub181025.html.

If you are unable to participate during the live webcast, the call will be archived on our website www.peoplesutah.com or at the same URL above until November 26, 2018. Forward-looking and other material information may be discussed on this conference call.

Forward-Looking Statements

Statements in this release that are based on information other than historical data or that express the Company’s expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date.

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Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include: (i) market and economic conditions; (ii) capital sufficiency; (iii) operational, liquidity, interest rate and credit risks; (iv) deterioration of asset quality; (v) achieving loan and deposit growth; (vi) increased competition; (vii) adequacy of reserves; (viii) investments in new branches and new business opportunities; and (ix) changes in the regulatory or legal environment; as well as other factors discussed in the section titled “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive. The Company does not intend, or undertake any obligation to publicly update these forward-looking statements.

 

About People’s Utah Bancorp

People’s Utah Bancorp is the holding company for People’s Intermountain Bank.  People’s Intermountain Bank is a full-service community bank providing loans, deposit and cash management services to individuals and businesses. The Company offers its clients direct access to decision makers, unparalleled responsiveness, seasoned relationship managers, and technology solutions. People’s Intermountain Bank has 26 locations in three banking divisions, Bank of American Fork, Lewiston State Bank, and People’s Town & Country Bank; a leasing division, GrowthFunding Equipment Finance; and a mortgage division, People’s Intermountain Bank Mortgage. The Company has been serving communities in Utah and southern Idaho for more than 100 years. More information about PUB is available at www.peoplesutah.com.

 

Investor Relations Contact:

Mark K. Olson

Executive Vice President and Chief Financial Officer

1 East Main Street

American Fork UT 84003

[email protected]

Phone: 801-642-3998

 

 

 

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PEOPLE’S UTAH BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

 

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PEOPLE’S UTAH BANCORP

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

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PEOPLE’S UTAH BANCORP

SUMMARY FINANCIAL INFORMATION

 

 

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PEOPLE’S UTAH BANCORP

SELECTED AVERAGE BALANCES AND YIELDS

 

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PEOPLE’S UTAH BANCORP

SELECTED AVERAGE BALANCES AND YIELDS

 

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PEOPLE’S UTAH BANCORP

NON-GAAP SELECTED FINANCIAL INFORMATION

 

 

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PEOPLE’S UTAH BANCORP

NON-GAAP SELECTED FINANCIAL INFORMATION

 

 

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PEOPLE’S UTAH BANCORP

NON-GAAP SELECTED FINANCIAL INFORMATION

 

 

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